UK acts to end Israel's OECD row

BRITAIN will this week try to head off a transatlantic row over Israel's application to join the 30 countries of the Organisation for Economic Co-operation and Development.

Trade Minister Michael O'Brien is due to fly to the OECD's annual meeting in Paris on Thursday to defuse a potentially explosive spat between the US and European countries led by France.

Washington is strongly backing Israeli membership of the 'rich man's club', while France is deeply hostile.

There are fears that the dispute could wreck an initiative under way to reform all major global economics institutions, including the OECD.

Israel wants OECD membership, not least because it would allow both the government and private companies to raise money more cheaply - under international 'prudential' rules, banks have to make smaller provisions against loans into OECD member-states. Already, Israel has amended its company law to conform to OECD guidelines.

But the fallout from the Iraq war, and European opposition to Israel's military operations in its occupied territories, has hardened opinion on both sides.

Britain, which is generally supportive of Israeli membership, will try to take the steam out of the issue by suggesting applicant countries should be judged solely on economic criteria.